Which of the following is NOT an advantage of a pollution tax?
A. It allows firms to equate its marginal abatement cost and the marginal benefit (tax savings).
B. It allows a low-cost firm to abate more.
C. It provides firms an incentive to invest in pollution abatement technologies.
D. It allows us to predict the total volume of pollution that will be discharged.
Answer: D
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A paint firm has just announced that it will be building a new plant in a small town that is currently experiencing a high level of unemployment. The new plant will create 500 new jobs in the area and will occupy unused land at the edge of town
The plant will also dump some harmful chemicals into the town's river. From an economic standpoint this dumping of chemicals A) is unimportant since the firm is reducing the unemployment in the region. B) creates a negative externality. C) is the production of a public good. D) creates a positive externality.
Social costs are associated with
a. entertainment expenses for business clients. b. government programs for the disadvantaged. c. deterioration of the natural environment. d. the high price of popularity.
A market with a single seller is called
A) perfectly competitive. B) monopolistically competitive. C) a monopoly. D) an oligopoly.
Which of the following functions is not performed by financial markets?
a. facilitating large-scale production b. reallocating spending across time c. reducing risk through diversification d. discovering new production techniques e. disciplining management of corporations